Ruchi Soya eyes Indonesia palm plantations

SINGAPORE, May 25 (Reuters) Ruchi Soya Industries Ltd. , India's leading palm refiner and soymeal exporter, is planning to either lease or buy palm plantations in Indonesia to ensure stable supplies of the raw material, the firm's managing director said on Friday.

With palm oil up more than 75 percent since January, 2006, Dinesh Shahra said it was important to secure supplies of the commodity, which could increasingly be diverted into biodiesel production, pushing prices up further.

''Palm oil is a very important raw material for us and we need to have some safeguard,'' he told Reuters on the sidelines of a traders' summit in Singapore.

''We are seriously looking at palm oil plantations in Indonesia.

We will take land on lease in Indonesia and plant oil palm. Also, we could look at buying plantations there if they are offered at a good price.'' Shahra, whose firm refines about 800,000 tonnes of palm oil annually, said Ruchi was also open to the idea of setting up a joint venture with an Indonesian palm oil firm.

''We are looking at any kind of partnership which can add value for them and for us,'' he added.

Shares of Ruchi were up 7.1 rupees, or 1.8 percent higher, at 395.70 rupees by 0818 GMT on Friday.

Malaysian crude palm futures extended gains on Friday to hit a new near nine-year high. The benchmark August contract was up 27 ringgit, or 1.1 percent, at 2,472 ringgit (0) a tonne at the midday break. It touched a session high of 2,484 ringgit, a level not seen since September 1998.

Shahra added that Ruchi was also looking at acquiring assets in the domestic market as it was aiming to expand its presence in cottonseed, rapeseed and ricebran oils.

''These oils have good potential in the domestic market,'' he said.

DOMESTIC MARKET Shahra said that Ruchi crushed 1.5 million tonnes of soybeans in the year ending March 2007. That would rise to 1.8 million, or 20 percent, by 2009. He added that the firm was alos looking at expanding its crushing capacity to 3 million tonnes by 2011, from the current 2.4 million tonnes.

Despite a rise in domestic soybean production, Shahra said exports of soymeal from India would slow down in coming years as domestic consumption was growing by almost 15 percent annually.

''Domestic production of soybeans is not growing at the same rate as consumption. Unless that happens we will we squeezed and soymeal exports will be hit,'' he added.

India's soymeal exports in the year ending March 2007 were down by around 12 percent at 3.5 million tonnes because of higher domestic demand. And Shahra said the firm was aiming to launch more new branded products to boost its market share even further.

''The domestic market will be very important for us. India's veg oil economy is growing annually by 5 to 7 percent, but demand for branded products is growing by more than 20 percent, he said.

The firm's Ruchi Gold brand of palm oil currently has a 65 percent share of the domestic market.

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